Tracy Hobbs, volunteer for gallery services, looks over art owned by the City of Detroit at the Detroit Institute of Arts. / Andre J. Jackson/Detroit Free Press

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and Mark Stryker

Chief U.S. District Judge Gerald Rosen of the Eastern District of Michigan was appointed August 13, 2013 as a mediator in Detroit's bankruptcy case to help resolve disputes between the city and its creditors, in an effort to avoid a protracted stay under court protection. / Free Press file photo

In the most optimistic scenario, the infusion of foundation cash would pave the way to a settlement with creditors — and short-circuit lawsuits by pensioners or the DIA that could hamper the city's ability to quickly emerge from bankruptcy. / Andre J. Jackson/Detroit Free Press

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National and local foundations have been asked to help bail out Detroit. But getting them to open their checkbooks will be a complicated dance of priorities, politics and practicalities.

The federal mediator in the Detroit bankruptcy is asking a group of at least nine local and national foundations to consider collectively contributing hundreds of millions of dollars to solve two of the most contentious issues in the case: municipal pensions on the chopping block and Detroit Institute of Arts paintings on the auction block.

The idea — which Chief U.S. District Judge Gerald Rosen pitched to foundation leaders earlier this month — shines a spotlight on the influential role that charitable foundations marshaling billions of dollars in assets are playing in helping to reinvent Detroit. But it also raises questions about whether organizations of radically different sizes — with disparate missions and sometimes conflicting priorities — can find common ground in a grand bargain to help Detroit claw its way out of bankruptcy.

Expect some soul-searching within board rooms of foundations across the country and across the street.

“Very few foundations do blank check-writing these days,” said Alberto Ibargüen, president of the Miami-based John S. and James L. Knight Foundation. “So we’re all going to look and say, ‘Is this something we believe in? Does this fit generally with what we do? Is it necessary for Detroit?’ And then, ‘How much?’ ”

With the clock ticking on negotiations between Emergency Manager Kevyn Orr and the city’s creditors, a foundation windfall would shore up pensions that face potentially devastating cuts while also protect art at the city-owned DIA from being sold to pay a portion of the city’s massive $18-billion debt.

Rosen made his appeal at a 3½-hour closed-door meeting with leaders from at least eight foundations earlier this month, including such powerhouses as the New York-based Ford Foundation, the Troy-based Kresge Foundation and key local institutions like the Skillman Foundation. The details were confirmed by three sources with knowledge of the meeting. Rosen did not pitch a formal plan, but sources said the idea was brought up in the context of a wide-ranging discussion about the challenges facing Detroit.

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If such a plan came to fruition, it would furnish a revenue stream that could placate pensioners who are among those pushing for a sale of art. At the same time it would ensure the survival of Detroit’s world-class museum as a key building block for a post-bankruptcy Detroit. In the most optimistic scenario, the infusion of foundation cash would pave the way to a settlement with creditors — and short-circuit lawsuits by pensioners or the DIA that could hamper the city’s ability to quickly emerge from bankruptcy.

Usually seed money

Since 2009, foundations have pumped more than $550 million into Detroit, supporting everything from the RiverWalk, urban farming and M-1 Rail project to the arts, schools, entrepreneur training and soup kitchens. But foundations are generally not in the business of bailing out cities or failing institutions or cleaning up fiscal messes created in the past, such as underfunded pensions. They typically provide seed money for specific future-oriented projects, with detailed reporting mechanisms and evaluations required to ensure the dollars are being well-spent.

One of the central tensions when it comes to Detroit is, as Ibargüen explained, that foundations do not wander outside their mission areas under normal circumstances. Yet the largest municipal bankruptcy in American history — in a city that many see as a bellwether for the future of urban America — hardly counts as normal.

“If you are about the city, you have to understand these are extraordinary circumstances,” said Ibargüen.

Ibargüen, who attended the meeting with Rosen, declined to reveal details, citing a confidentiality request from the judge. Ibargüen did acknowledge that the foundations could play a role in a global agreement among the city and creditors, but it was far too early in the discussion for specifics.

However, the scale of a foundation-driven rescue that Rosen is proposing on behalf of a single city would be unprecedented. Even on an extended time horizon of perhaps 20 to 25 years, a new fund totaling hundreds of millions of dollars aimed at pensions, art or other bankruptcy-related needs is a lot to ask of foundations, both those heavily invested in the city and those whose priorities extend far beyond Detroit.

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“I think if I took all of the assets of my foundation and spent them (here) in one day, what would I do for the rest of the 364 days of the year?” asked William White, president and CEO of the Flint-based Charles Stewart Mott Foundation. “The problems we’re facing in Michigan are huge.”

White, who also attended the meeting with Rosen, declined comment on specifics. With $2.3 billion in assets and some $91 million in annual grants, the Mott Foundation was one of the larger of the foundations represented at the meeting.

A spokesman for one of the smaller Detroit-area foundations, who spoke on the condition of anonymity because of the sensitivity of the discussion, said it was doubtful the organization could participate given its modest size.

Meanwhile, U.S. Bankruptcy Judge Steven Rhodes is expected to rule any day now on the city’s eligibility to enter bankruptcy. If the judge rules that the city has met the tests of eligibility, then emergency manager Orr would likely file his detailed reorganization plan for the city before the end of the year or in early 2014.

The largest of the foundations represented at the meeting with Rosen was the New York-based Ford Foundation, which has total assets of nearly $11 billion and annual worldwide grants of around $500 million. The smallest was the Fred A. and Barbara M. Erb Family Foundation of Bloomfield Hills, which has assets of $171 million and grants about $5 million a year, all in metro Detroit.

Some of the foundations have broadly defined missions such as the Troy-based Kresge Foundation, one of the largest foundations in the country with assets of $3 billion. Kresge funds initiatives in arts, health education, environment, community development and human services. In the past five years the foundation has poured $137 million into Detroit, driving the M-1 Rail project, helping build the RiverWalk, and contributing tens of millions to local cultural institutions and artists.

On the other hand, the $430-million Skillman Foundation in Detroit, which has granted $76 million in the city since 2009, focuses narrowly on improving the lives of children in mostly six neighborhoods in Detroit and areas like education, safety and youth development. Similarly, the $7.3 billion W.K. Kellogg Foundation in Battle Creek, which has granted $79 million in Detroit since 2009, concentrates on the development of children through education, health and the financial security of families.

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The Mott Foundation is larger than most in total assets — $2.3 billion — but it balances an international profile with a major commitment to Flint, which receives 35% of its grant money. Since 2009 the Mott Foundation has granted $8 million in Detroit.

A leading Detroit civic figure, speaking on condition of anonymity because of the sensitivity of the issue, cast doubt whether foundations could take the lead role in rescuing the city.

“Foundations potentially can play a role that leverages other support but foundations aren’t able to plug whole gaps by themselves,” this leader said. “If foundations tried to fill that entire gap, it would come at the expense of other ways foundations support the growth of the city.”

Some leaders of Detroit nonprofits have privately expressed concerns that a massive shift in foundation resources to the city’s bankruptcy could leave their own organizations fighting for increasingly scarce resources. David DiChiera, founding general director of Michigan Opera Theatre, said all cultural organizations are always “on edge” when it comes to funding — from foundations, corporations or individuals.

Still, he said he remained focused on the positive role that the foundation community is playing in Detroit, especially the city’s cultural institutions.

“I’m not surprised that they might be looking at ways they might be able to help protect others, including the DIA,” said DiChiera. “(But) one has to believe that they would not do anything that would be detrimental to any of the others, because it’s all part of the commitment to what they feel is important for the city.”